Can They Make It?

Can they make it? Amid reports of intense disagreements, European Union leaders are now out of time for their EU Summit meeting tomorrow, after which German Chancellor Angela Merkel said they would present a coherent plan for dealing with the euro zone crisis. There were reports that began surfacing yesterday that disagreements were so intense it was possible it could be put off again. The EU finance ministers meeting scheduled for Wednesday has reportedly been postponed.

Italy and the politics of reform: Humiliation may be the only way to solve Italy's debt crisis. Italian Prime Minister Silvio Berlusconi is enduring what the Financial Times called "the ultimate downgrade," a public humiliation for a systemic crisis in the euro zone that was only partly his country's making.

Ian Cumming | Getty Images

Statue and Italian Flag in front of Vittorio Emanuele monument.

While Mr. Berlusconi did get an austerity budget through, he has missed a Sept. 30 deadline to come up with a package of economic reforms. Good luck with that: Coming up with a realistic package of reforms — by tomorrow! — in the labor market alone would likely destroy his coalition. Last night, his own cabinet could not agree on a single issue: whether or not to raise the retirement age to 67 from 65. Allowing his country to go into "special administration" by the European Central Bank (ECB)might give Berlusconi the cover he needs to get the reforms through.

What is Italy's central bank chief, Mario Draghi, saying? This morning much of the commentary was about the ECB; it's too constrained, too narrow, and will have to be bigger and stronger and more flexible. It's the only bazooka left, many insist.

Those in favor of getting the ECB involved further in the European Financial Stability Facility (EFSF)were disappointed to hear that the ECB was opposed to turning the EFSF into a bank with ECB banking. No matter: those bullish on ECB expansion are turning to Nov. 1: Draghi's first day as ECB president. On Nov. 3, right after the Group of 20 nations meeting, there is an ECB Governing Council meeting, also Draghi's first as ECB president. Draghi will resist printing money. He will be successful — but only as long as the crisis is relatively contained. In the end, they will print money if the alternative is the collapse of the euro.

Elsewhere:

1. We don't need your stinkin' recapitalization money: Deutsche Bank surprised everyone by posting a profit in its third quarter, but the chief financial officer then noted that the bank will not have any capital shortfall, even with a requirement of a 9 percent Tier 1 capital ratio that will likely be required by bank authorities.

2. Earnings are mixed this morning, with several big industrial and material companies disappointing, but high end retailers continue to outperform.

a.) 3M down 6 percent pre-open, missed expectations for its third quarters earnings. The miss in earnings was due to weakness in the electronics market and inventory-reduction efforts taking place among customers. The company also lowered its full-year outlook, citing expectations for slower economic growth and lower demand. 3M reported earnings per share of $1.52 vs. a $1.61 consensus estimate and third-quarter revenue of $7.5 billion vs. $7.77 billion estimate.

b.) Steel stocks disappoint: AK Steel Holding down 7 percent pre-open, reported a narrower quarterly loss and said it could not give an outlook for the rest of the year because of uncertainty and volatility in the U.S. economy and other markets.

Similar comments from U.S. Steel, although posting better than expected third quarter profit, also warned its fourth quarter profits would weaken due to the soft economies in Europe and North America. ?

c.) High end retail continues to outperform: Coach reported a higher-than-expected first-quarter profit as sales rose in North America, despite the shaky economy and continued to grow in China. The company said it was ready "for another excellent holiday season." Coach reporting first-quarter revenue of $1.05 billion, compared with a $1.023 billion consensus estimate.

d.) DuPont reporting a 23 percent jump in profits during its third quarter, helped by price hikes and strong demand for a key paint pigment. The chemical maker posted a net income of $452 million, or 48 cents a share, compared with $367 million, or 40 cents a share in the year-earlier period. For the year, DuPont expects to earn $3.97 a share to $4.05 a share; it previously forecasted $3.90 a share to $4.05 a share for the year.